Lower the high cost of living;Basis for investment;New home; [News items];

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66 HASKINS & SELLS June
Lowering the High Cost of Living
THE high cost of living may not be
attributed to any one thing. Even the
war may not be blamed as the sole cause.
Many things contribute, incidentally, to a
condition which during the process of
adjustment to a higher price level at times
seems intolerable.
It was inevitable that there should have
been a rise in prices after the war. It did
not require an expert economist to foresee
such a condition. Interest rates needed no
exhaustive study such as one research man
spent months in giving to the subject in
order that their trend might be forecast.
But it does not seem necessary that all the
present contributing causes need exist.
The butcher explains the high price of
veal to the housewife by telling her that
numerous government inspections of cattle
and meat are now required. The farmer
justifies the previously unheard of prices
of butter and eggs by a statement that feed
for cows and hens was never before so
high. The real estate agents lay the blame
on the economic law of supply and demand
when they offer ramshackle houses at twice
what they are worth. The public is being
slowly educated to the higher prices and
although it groans and complains, it pays.
Recent steps taken by the Federal
Reserve Bank to curb speculation by rais­ing
the discount rate has resulted only in
shaking down the market temporarily.
The scheme fails because it is wrong in
principle.
Is there any reason to suppose that the
real estate operator who sees a chance to
realize a profit of forty or fifty per cent.
inside of a month is bothered by the raise
of a few points in the discount rate?
Most banks during the war before mak­ing
loans insisted on knowing the purpose
for which the funds were to be used. The
discriminating banker today is likely to
require information regarding the use to
which the proceeds of loans are to be put.
He is much more likely to make the loan
for serious and necessary business uses
than for the purchase of automobiles, or
player-pianos, or speculation in the stock
market. His inquisitiveness may be
impertinent but his position enables him
to exercise it.
What some of the individual or member
banks now do might be carried out to
great advantage, it seems, by the Federal
Reserve Bank. The same careful inquiry
and discrimination by the parent bank
with regard to rediscounts might work
infinitely more good than raising the dis­count
rate. Funds for legitimate and
necessary business purposes should be
made available. The rate should be as
low as possible. Funds for speculative,
profiteering, gouging schemes promoted
with the object of taking advantage of
helpless, law-abiding citizens should not
be obtainable at any price.
The Federal Reserve Bank under such
procedure might not show earnings of
one hundred and twenty-six millions, but
the high cost of living might be appreciably
lowered. At any rate, the official bank of
the government might take some pride in
having served as an instrument in relieving
a condition the burden of which is well-nigh
intolerable.
The Basis for Investment
In these days of high prices', when a
dollar buys only half what it formerly did,
the business enterprises of the country have
been forced generally to greatly increase
their capital. As is usually the case, the
appeal in the last analysis has been to the
public.
The vast financial mechanism which
handles securities issues, disposes of them
ultimately to the small investor. They may
be placed originally with an underwriting
syndicate. They may pass in turn to the
large financial houses, to the investment
houses, and to the banks and trust com­panies
which distribute them. At last they
reach individuals or their representatives